Delaware Sent $4.2 Million to Dead People. It’s Time to Admit There’s a Welfare Waste, Fraud, and Abuse Problem.

Medicaid was created to serve the truly needy—the elderly, people with disabilities, pregnant women, and low-income children. A trait all of these groups have in common? They’re all alive.

Imagine Delawareans’ surprise, then, when a federal audit caught their state using millions of their tax dollars to write welfare checks for people who are dead.

In March 2024, the Department of Health and Human Services Office of Inspector General (OIG) published its findings: Auditors pulled a sample of 100 Medicaid capitation payments and found that 53 of them were unallowable. Delaware had been paying managed care organizations on behalf of enrollees who had died, and nobody caught it. Based on that sample, the OIG estimated Delaware made $4.2 million in improper Medicaid payments for deceased enrollees during the audit period.

Delaware had become part of a disturbing nationwide trend: More than 450,000 Medicaid payments—totaling $249 million—were made on behalf of deceased enrollees in states across the country.

The OIG’s own summary of the problem is straight to the point: “Delaware made unallowable capitation payments on behalf of deceased enrollees because it did not have adequate processes in place to enable it to identify deceased enrollees.”

Translation: Delaware officials didn’t have a reliable system for removing dead people from its Medicaid program. Death records were not being cross-checked, so enrollment was not being updated, and the payments kept going out.

Unfortunately, there are many other known examples of welfare fraud in Delaware.

Auditors also found that simple data entry errors linked Social Security numbers of deceased individuals to living enrollees. That kind of mistake should get caught before a payment is ever processed. In Delaware, it was missed.

In 2021, Connections Community Support Programs, a Delaware behavioral health provider, agreed to pay more than $15 million to resolve federal accusations that it deliberately overbilled Medicaid, allegedly billing mental health services under inflated procedure codes to collect payments it was never entitled to receive.

In 2019, a former Wilmington convenience store owner was sentenced to 14 months in prison after pleading guilty to the largest food stamp fraud scheme in Delaware history—a $1.7 million operation in which he allowed customers to trade their food stamp benefits for cash at half their value, then redeemed the full amount from the federal government.

And then there’s the 2016 case from inside Delaware’s own Department of Health and Social Services. Seven former employees—all responsible for issuing food stamp benefits—were arrested and indicted for stealing nearly $1 million in federal food assistance. They created more than 100 fictitious food stamp cases and intercepted the EBT cards at state service centers, then used them personally or sold them at a discount.

Delaware has a welfare waste, fraud, and abuse problem. But it also has the ability to solve it.

Delaware should implement rigorous cross-checks with state and federal data, such as the Death Master File. Delaware should clean up its welfare rolls, and reduce the caseload so that there can be proper oversight—ideally preventing bad actors, rather than just finding them after taxpayer dollars have already been stolen or lost.

States should want to fix issues with program integrity in their welfare programs because it’s the right thing to do for the truly needy who rely on these programs and for the taxpayers who fund it with their hard-earned paychecks. But Delaware now has federal pressure to strengthen their safety net.

Under a new federal law, if a state’s Medicaid eligibility error rate exceeds three percent, the federal government will stop matching spending above that threshold. For food stamps, if a state’s payment error rate exceeds six percent, the state must pay a share of all benefits. Delaware’s food stamp payment error rate is 12.37 percent, which could cost the state more than $38 million per year. In Medicaid, the state’s eligibility error rate is 6.1 percent, with projected penalties costing the state $66.7 million per year.

Spending millions of dollars giving welfare to dead people is unacceptable. Losing tens of millions of dollars to the federal government because state leaders did nothing to improve program integrity is even worse.

It is time for Delaware’s leaders to address the root causes of waste, fraud, and abuse in food stamps and Medicaid and protect welfare resources for those who truly need them.

For more on welfare program integrity and promoting work over welfare, click here.